Loan Payoff Calculator
See how extra monthly payments or a lump sum shorten your loan, with the new payoff date, interest saved and a full schedule.
Loan Payoff Calculator
Adding $200 a month to a $185,000 loan at 6.75% with 25 years left pays it off in 18 years 2 months instead of 25, saving about $62,650 in interest. Every dollar of extra payment goes straight to principal, so it stops charging interest for the rest of the loan.
How to use this loan payoff calculator
- Enter your current balance, interest rate and the time left on the loan.
- Enter the extra amount you can pay each month.
- Optionally add a one-time lump sum, such as a bonus or tax refund, applied now.
- Read the new payoff date, the time and interest saved, and the return on your extra money.
- Check the chart and schedule, then tell your lender to apply extra money to principal.
The math behind the result
The regular payment is P × r ÷ (1 − (1 + r)−n). Each month interest is the balance times the monthly rate, and everything paid above that reduces principal: new balance = balance − (payment − interest + extra).
The calculator repeats this month by month until the balance reaches zero, with and without your extra payments, and compares the two schedules.
Worked example
$185,000 balance, 6.75% APR, 25 years left, regular payment $1,278.19:
- With $200 extra a month: paid off Dec 2044 instead of Oct 2051
- Time saved: 6 years 10 months
- Interest: $135,806 instead of $198,456, saving $62,650
- You add about $43,600 of extra payments over the shorter loan, so each extra dollar returns about $1.44 in interest saved
Why extra payments save so much
Interest accrues on your remaining balance. An extra $200 today removes $200 of balance, so you stop paying interest on it for every remaining month, and that saving compounds. Extra payments made early in the loan matter most, because the balance and the interest are highest then. A lump sum in year one can save more than the same amount paid ten years later.
Check for prepayment penalties first
Most mortgages, auto loans and student loans allow extra payments without a penalty, but some loans charge a prepayment fee, especially certain personal, business and older mortgage loans. Read your loan agreement or ask your servicer. Also confirm how the servicer applies extra money: it should be applied to principal, not held toward next month’s payment.
Should you pay extra or invest?
Paying extra on a loan earns a guaranteed return equal to the loan rate, here 6.75%. Investing might earn more but with risk. A sensible order is: capture any employer retirement match, build an emergency fund, pay off high-interest debt (credit cards), then decide between extra loan payments and investing based on the loan’s rate and your comfort with risk.
Other ways to pay a loan off faster
- Biweekly payments: half the payment every two weeks adds up to 13 full payments a year instead of 12.
- Round up: pay $1,300 instead of $1,278.
- Apply windfalls: bonuses, refunds and gifts.
- Refinance to a shorter term if you can get a lower rate; compare with our refinance calculator.
Key terms
- Principal
- The amount you owe, not counting future interest.
- Prepayment penalty
- A fee some lenders charge for paying a loan off early.
- Amortization
- Gradual repayment of a loan through scheduled payments.
- Recast
- Re-calculating your payment after a large principal payment, without changing the rate.
Frequently asked questions
How do I calculate my loan payoff date?
Take your balance, rate and payment, and step forward month by month: interest is balance times the monthly rate, the rest of the payment reduces principal. The date the balance reaches zero is your payoff date. The calculator does this with and without extra payments.
How much interest will I save by paying an extra $200 a month?
On a $185,000 loan at 6.75% with 25 years left, about $62,650, and you finish 6 years 10 months early.
Is it better to make one lump-sum payment or small extra payments?
The earlier the money reaches the principal, the more interest you avoid. A lump sum now saves more than the same total spread over years, but regular extra payments are easier to sustain.
Will extra payments lower my monthly payment?
Not unless you recast or refinance. On most loans the payment stays the same and the loan simply ends sooner.
Do extra payments go to principal automatically?
Not always. Tell your servicer in writing, or use the extra-principal option when you pay, so it is not applied to future interest or held for next month.
Should I pay off my mortgage early?
It depends on your rate, other debts, emergency savings and investment options. A guaranteed saving at your loan rate is attractive when the rate is high; with a very low rate, investing may earn more.
Sources and further reading
Related calculators
Related guides
Figures in the examples are illustrative and use the inputs shown. Market rates and program rules change; confirm current terms with your lender or the linked official sources before making a decision.
📚 Related Finance Topics
Understanding loan payments and interest is foundational to smart borrowing. Whether you are financing a home, car, or personal expense, knowing your true cost helps you negotiate better rates and pay off debt faster. Always compare the APR -- not just the interest rate -- to understand the total cost.
See All Loan Calculators Tools →🛠️ You Might Also Need
Built by Abdul Rahman · Last reviewed: · Report an error
Disclaimer: This calculator provides estimates for educational purposes only and is not financial, tax, or legal advice. Results depend on the figures you enter and on simplified assumptions; actual rates, taxes, and outcomes will differ. Consult a qualified professional before making financial decisions.